Seeing interest from a lot of foreign players in SpiceJet: SL Narayanan, Sun Group

ET Now|

Updated: Nov 26, 2012, 02.29 PM IST

In an interview with ET Now, SL Narayanan, Group CFO, Sun Group, talks about SpiceJet and its stake sale rumours. Excerpts:

ET Now: Could you give us a sense as to when the deals are likely to materialize? From what we understand from the aviation ministry is that the deal with Jet and Etihad is likely to culminate over the next 45 days.

SL Narayanan: I would not be able to comment on the other deal, but all I can say at this stage is there is a lot of interest from very respectable names in the aviation business. Things are however very preliminary.

It will be too premature to comment about anything at this time and no specific names can be mentioned because ever since the regulations got liberalised a few months ago, the sentiment has certainly improved. There is a lot of interest. But at this time, there is no specific name that can be either mentioned or even confirmed.

ET Now: Right now you do not have too much debt on your books. The promoters, as of now, are putting in this money. Can you just tell us why a stake sale at this point would be required for Spice?

SL Narayanan: You may have noticed the net worth has been eroded. The airline has been doing fairly well in the last few months and the cash flows have been strong. But we need to correct that in balance from the balance sheet and therefore the promoters would be bringing little less than Rs 200 crore based on the SEBI formula. Of course this will be out of the acquisition limit for the next financial year. So it is being brought in that some kind of convertible instrument. The actual equity will get converted after 1st of April 2013. There is no other explanation necessary at this stage.

ET Now: What is the exact net worth of SpiceJet at this point in time? What are the accumulated losses so far as well as what is the funding requirement for the airline for the next one year?

SL Narayanan: The net worth is negative by some of little more than 100 crore as of 30th September and this cannot be counted as equity till it gets converted. But there is sufficient cash on the balance sheet of SpiceJet and the exact amount of funding will be clearer once we complete the business plan exercise for FY13-FY14. It may be little premature to comment on specific numbers at this stage and once we get better clarity, we will be able to share more numbers with you.

ET Now: If you could just confirm to us whether you have sent any official communique to the ministry as well because it is ministry sources what the wires are quoting the information from. Have you asked for an official approval from the government? What has the government response been to this proposal?

SL Narayanan: It is very privileged even assuming that there are some kind of a discussion between SpiceJet and any other airlines. There has to be high level of confidentiality and there is no way that those details could be diverged till the time our term sheet has reached or a definitive agreement is signed off by contracting parties.

ET Now: If you could just highlight for us what exactly would a middle eastern carrier bring to the table for a SpiceJet?

SL Narayanan: A lot of traffic would get routed through those hubs. We have fairly large airports on both sides of the country both to the east and to the west and there is a lot of traffic that emanates from India and goes onwards to other destinations. So these countries would be most interested in tapping that awkward traffic. So that is what is going to be a great value to those companies.